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Countries, the world over, must brace for even higher interest rates

15 June 2022 12:26 PM
Tags:
Interest rates
Inflation
Personal finance
Kevin Lings
investing
investments
Refilwe Moloto
stanlib
markets
Breakfast with Refilwe Moloto

Refilwe Moloto interviews chief economist at Stanlib Kevin Lings.

Runaway inflation of the kind not seen since the 1970s is gripping the world.

In the United States, it is running at 8.6% with food inflation over 10%.

“There are few countries without an inflation problem,” says chief economist at Stanlib, Kevin Lings.

Interest rates are rising around the world. © takasuu/123rf.com

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In South Africa, inflation is at 5.9% (April), still within the reserve bank’s target and lower than most of our trading partners, despite fuel prices climbing to record levels.

Food price inflation remains a concern, as the war in Ukraine – a major producer – persists.

“The other components of inflation are fairly well-behaved,” says Lings.

“In a weak economy, it’s difficult to get consumers to pay significantly more.”

Around the world, central banks are responding to spiralling inflation by raising interest rates.

In fact, 42 countries have started on an interest rate hiking cycle, with others sure to follow.

Refilwe Moloto interviewed Lings (scroll up to listen).

Pushing up interest rates in South Africa is not going to bring down the petrol price… but if you don’t push them up… pressure on other prices will take hold more easily… It sends a bad message… You get wages going up… The reserve bank is forced to raise interest rates…

Kevin Lings, chief cconomist - Stanlib

We are short of capital all the time… You put up interest rates to get foreigners to put money in your country… If you don’t do it, money goes to another country with a better interest rate…

Kevin Lings, chief economist - Stanlib

China’s zero-Covid strategy… causes an additional disruption to supply chains… If they can move past this… undoubtedly that helps… Every country is experiencing some shortage of some goods…

Kevin Lings, chief economist - Stanlib

All markets are getting cheaper… There’s still significant downside risk… Markets might still be expensive, globally. South Africa… we’re encouraged by valuations… There is definitely value in South African equities…

Kevin Lings, chief cconomist - Stanlib



15 June 2022 12:26 PM
Tags:
Interest rates
Inflation
Personal finance
Kevin Lings
investing
investments
Refilwe Moloto
stanlib
markets
Breakfast with Refilwe Moloto

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